Have you recently incorporated your business? Knowing where to go from there can be confusing, especially if you haven’t done it before. It’s important that you’re aware of the next steps in this process so that your experience is as easy and successful as possible. This blog has broken down the most crucial elements to take care of next. Check out this easy-to-follow, 4-step process to get started with confidence!
Step One: Banking and Credit Cards
The first step you should be taking after incorporating your business is dealing with all of your banking needs. First, open your corporate business bank account. This is very important to have as a first step because you need to be able to pay for things that will help you in setting up the corporation. You don’t want to be paying out of your own personal bank account and then sorting out the finances later. It’s much easier to open your corporation’s bank account first and use that for your business spending.
When opening this new bank account, you should also be thinking about your credit card situation. It’s a good idea to close your credit card merchant account and open a new one while you’re at the bank. This also means applying for a new corporate credit card with the corporation’s name attached.
Getting all of the immediate banking details out of the way first will help you in completing the rest of the steps, as many of them will require payments or for you to have your banking information on hand.
Step Two: All Things Registration and Insurance
Step two has to do with all things registration and insurance. This step is more detailed, and it’s crucial in your journey after incorporation. You will want to make sure that your corporation is registered with its own GST/HST account and payroll account. These registrations will make sure you have a brand new set of accounts dedicated to the corporation. It’s important to note that you’ll want to make sure the payroll is set up at the same time as the GST/HST registrations so that you can immediately start paying yourself and any other employees you may have! Essentially, you want to make sure that everything that is solely business-related is closed and then transferred to the corporation.
You’ll want to notify your insurance provider as you may not be insured or may be paying premiums on a business that no longer exists. This process will also open up the opportunity for you to buy the insurance that you need for the corporation. This is important as you need the correct insurance for liability purposes before you start operating. Therefore, even though you may have it for yourself as a sole proprietor and your current business, you must get new insurance for your corporation.
When thinking of other things you may need to register for or have ready to work with, you should be looking into business licences, accounting firms, or other governing bodies that will assist you in your business. This is a little more personal to you and what you need to do for your business but, it should be done after setting up your bank accounts (as part of step two) as you’ll probably have to pay to set up these things and may be required to provide your HST and CRA business numbers.
Step Three: Contracts and Agreements
You’ll want to make sure you’re updating contracts with your clients and suppliers to reflect the new entity of your corporation. First, change all the contracts your company has within the corporation. You’ll want to go through all of your current suppliers and make sure you’re signing completely new contracts with them that reflect the corporation.
During this process, you’ll want to create new agreements for all of your clients so that everyone will have an idea of the new scope of work that will be taking place. This includes constructing new contracts for any sub-contractors you may have! It’s important that you complete this as you want to make sure that you’re on the same page with everyone from the beginning and that there are no communication errors or misunderstandings that happen surrounding the transition. If you’re unsure of how your new agreements hold up, it’s always good to have your lawyer look over them to reassure you or suggest any changes.
Step Four: QuickBooks, Assets, and New Titles
Assets are also key to this process and will have to be moved over to your corporation. You’ll want to identify which assets you can move over easily and which assets you’ll need to complete a section 85 rollover for. It’s always good to discuss this process with your accountant but, within a section 85 rollover for your larger assets, you can complete it on a tax-deferred basis. At a basic level, you are selling your assets to yourself. If this is done correctly with the help of an accountant, you will be owing zero tax on the ‘sale’ of assets.
It’s also important to make sure that your QuickBooks is set up properly so that you can record everything you need to, including the value of your assets as you’re exchanging these assets for shares in the new corporation. Your QuickBooks file should be brand new, if you continue to use the same accounting file it will only result in confusion and disorganization. This is especially important for tax purposes since tax reporting for a sole proprietorship is different from that of a corporation.
After all of this, you have just a couple of small steps left like changing the name of all your accounts to your corporation name (if there was a name change that happened). This means updating your Zoom or video communication platforms, other online accounts and URLs, and giving yourself a new email address if need be!
Sometimes knowing what to do in a new process can be confusing, but hopefully, with these steps, you’ll know exactly what to do next after incorporating your business!
When deciding on which accounting firm is the best fit for your business, all the different options can be overwhelming. At UpSide Accounting, we try to make it as seamless and easy for you as possible. If you need help with your journey after incorporation as a creative business owner and would like to explore working with us, contact us here. We are here to help!